How to Insure a Lunar Mining Operation

Mining lunar resources and its feasibility have come a long way in just the last decade - from a pipe dream to a real possibility. Let’s break down how we might go about dealing with a lunar mining operation from an insurance perspective.

4 months ago   •   3 min read

By Colby Tunick
Insurance for mining on the moon is a small step that requires sufficient planning.

If humanity is ever to become a celestial species, we will need to extract resources from other planetary bodies. To fuel that growth means mining on the moon. Eventually, these lunar resources will allow us to colonize other bodies, which makes mining on the moon a true first step to a greater expansion of human life through the galaxy. Mining lunar resources and its feasibility have come a long way in just the last decade - from a pipe dream to a real possibility. As with any large-scale project, financial backers will expect the effort to have an insurance policy. So, let’s break down how we might go about dealing with a lunar mining operation from an insurance perspective.

Insuring off-world activities is going to take a lot of manual effort at first until the risks are better known.

Bring out the underwriters

Any mining operation is hazardous. Add the complexity of mining in a vacuum on a foreign body and underwriters have many novel factors to consider. With the potential for severe loss comes the opportunity to treat this as a commercial package of liability, property, workers’ compensations, and (space) vehicle insurance.

Another potential way to ensure an operation like this would be to take a page out of reinsurance treaties. If the loss exceeded a certain threshold, then the insurance policy would kick in. This seems especially likely if the lunar mining operation forms a captive insurance company. Regardless of the path taken, the cost to the operation would be sky high - puns intended.

Space-related litigation will tie up court rooms for years.

When the Lawyers Get Involved

Any novel endeavor raises the likelihood of correspondingly novel legal issues. While it's something our overly optimistic minds might not consider, who would be liable for returning the remains of deceased lunar miners? While I’m sure there would be iron-clad employment contracts that would attempt to spell out these more nebulous details, many will still end up in litigation. Therefore, any lunar mining operation would do well to get coverage for its various legal liabilities for when they arise.

Outer space has the same laws as earth's oceans.

The ExtraTerrestrial Factor

No, we do not mean aliens. We mean that for business purposes, operating on any foreign body is subject to the UN Law of the Sea, so there are really no laws at all. What if two companies want the same ore deposit? There would be nothing illegal from them fighting a war over it in 1/6th earth gravity. In such a lawless environment, how can insurance companies expect to manage risks?

One way may bind a company to a specific nation’s laws. For example, a US-based corporation, to not invalidate their policy, would need to follow the laws set forth by the United States. This albeit extrajudicial way of enforcing standards on the moon may be the only way to truly manage risks with private corporations rather than nation-states holding insureds accountable.

Don't forget to look up, and look ahead.

Not Just a Flight of Fancy

If you have gotten to this point in the article, you may still believe that lunar mining is something that will not happen in your lifetime. And you may be right. Even though companies have raised tens of millions of dollars to extract resources from the moon, the technical and logistical challenges of doing so are immense. Still, insuring mining on the moon is the same from an insurance perspective as mining resources in international waters in the deep ocean (which is already happening). To be prepared for extraterrestrial business activities would provide the incumbent with instant market leader status. Therefore, the argument should, how long can insurers wait before understanding how they will ensure of world activities? The timeframe may be much sooner than we expect.

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